Malaysia is set to invest up to \$150 billion over the next five years in procuring equipment from American multinationals, with a focus on the semiconductor, aerospace, and data centre industries. The move forms part of a broader trade agreement with the United States, aimed at reducing tariffs and balancing trade. As part of the deal, the U.S. announced a reduced tariff of 19% on Malaysian goods starting August 8—lower than the 25% initially proposed.
Trade Minister Tengku Zafrul Aziz told parliament that the deal also includes a \$3.4 billion annual purchase of liquefied natural gas by state energy firm Petronas from the U.S., alongside a commitment to invest \$70 billion in cross-border U.S. projects. These efforts are aimed at narrowing the \$24.8 billion goods trade deficit that the U.S. recorded with Malaysia in 2024. Negotiations leading to the deal had been ongoing since the U.S. imposed tariffs under former President Donald Trump’s administration.
Malaysia has also agreed to key concessions, including reducing or eliminating duties on 98.4% of U.S. imports and easing several non-tariff barriers. Additionally, it will drop a rule requiring U.S. tech firms to contribute to a national fund from their Malaysian revenues. These moves are expected to create a more favourable trade environment and further cement bilateral economic ties.
While Malaysia secured exemptions for pharmaceutical and semiconductor exports, concerns remain over potential future tariffs on semiconductor chips due to U.S. national security laws. Tengku Zafrul cautioned that the sector should brace for possible changes and emphasized the need for continued strategic preparedness in navigating evolving trade regulations.